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2019 Supreme(Mad) 480
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
Ind Trust Travels and Cargo Pvt. Ltd., Rep. by its Director - Appellant
Versus
Interglobe Technology Quotient Pvt. Ltd., Rep. by its Director - Respondent
O.P. Nos. 247 & 248 of 2019 & A. Nos. 2399 & 2402 of 2019
Decided on : 30-04-2019
For the Petitioners:P. Giridharan, Advocate.
For the Respondent:Krishna Srinivasan, M/s. S. Ramasubramaniam Associates, Advocates.
The lack of notice within the meaning of section 21 of the Arbitration and Conciliation Act and the applicability of limitation were the central legal points established in the judgment.
Headnote:
Arbitration and Conciliation Act - Arbitration - Section 34(2) - Summary of Acts and Sections: The judgment discusses the application of Section 34(2) of the Arbitration and Conciliation Act, 1996, and the implications of the lack of notice within the meaning of section 21 of the Act. It also addresses the issue of limitation and the grounds for setting aside the arbitral award. The court found that the impugned award as it relates to one respondent is liable to be set aside due to being in conflict with public policy of India and being invalidated on the ground of lack of notice within the meaning of section 21 of the Act. The judgment also highlights the significance of notice within the meaning of section 21 and its mandatory nature in arbitration proceedings.
Fact of the Case:
The case involved two Original Petitions (O.Ps) filed under Section 34(2) of the Arbitration and Conciliation Act, 1996, seeking to set aside an arbitral award. The petitions were filed by travel agents, Ind Travels and Rasi Travels, against a software provider, Interglobe Technology Quotient Pvt. Ltd. The dispute arose from agreements between the travel agents and the software provider for the provision of Galileo GDS software.
Finding of the Court:
The court found that the impugned award as it relates to one respondent is liable to be set aside due to being in conflict with public policy of India and being invalidated on the ground of lack of notice within the meaning of section 21 of the Act. The impugned award as it relates to the other respondent was sustained.
Issues: The issues addressed by the court included the lack of notice within the meaning of section 21 of the Arbitration and Conciliation Act, the applicability of limitation, and the grounds for setting aside the arbitral award.
Ratio Decidendi: The court held that the lack of notice within the meaning of section 21 of the Act invalidated the impugned award and that the claim was clearly barred by limitation. The court also emphasized the mandatory nature of notice within the meaning of section 21 in arbitration proceedings.
Final Decision: O.P.No.247 of 2019 was allowed, and O.P.No.248 of 2019 was dismissed. The parties were left to bear their respective costs in O.P.Nos.247 and 248 of 2019.
(Prayer: O.P.No.247 of 2019 is filed under Section 34(2) of the Arbitration and Conciliation Act, 1996 seeking to set aside the award dated 20.11.2018 passed by Hon'ble Mr.Justice M.Vijayaraghavan (Retd.), Sole Arbitrator in Arbitration Case No.1 of 2016.
O.P.No.248 of 2019 is filed under Section 34(2) of the Arbitration and Conciliation Act, 1996 seeking to set aside the award dated 20.11.2018 passed by Hon'ble Mr.Justice M.Vijayaraghavan (Retd.), Sole Arbitrator in Arbitration Case No.1 of 2016.)
1. This common order will dispose of both these 'Original Petitions' ('O.Ps' for brevity). 'Original Petition' in singular shall be referred to as 'O.P' for brevity. Besides this, O.P.No.247 of 2019 shall be referred to as 'senior O.P' and O.P.No.248 of 2019 shall be referred to as 'junior O.P' for clarity.
2. Both O.Ps, i.e., senior and junior O.Ps have been filed under section 34 of 'The Arbitration and Conciliation Act, 1996' ('A and C Act' for brevity) assailing the same arbitral award, i.e., an 'Arbitral Award dated 20.11.2018' ('impugned award' for convenience and clarity) made by an 'Arbitral Tribunal' ('AT' for brevity), constituted by a Sole Arbitrator, who has been appointed by this Court vide order dated 27.10.2015 made in O.P.No.206 of 2013 under Section 11 of A and C Act.
3. There is a sole petitioner and lone respondent in both O.Ps. Lone respondent in both O.Ps is the same entity, i.e., Interglobe Technology Quotient Pvt. Ltd., which shall hereinafter be referred to as 'SFP' denoting 'Software Provider'. To be noted, SFP is the lone claimant before AT. Petitioner in senior O.P is 'Ind Trust Travels and Cargo Pvt. Ltd.', (second respondent before AT) and this entity shall hereinafter be referred to as 'Ind Travels' for the sake of convenience and clarity. Likewise, petitioner in junior O.P is 'Rasi Travels & Cargo Pvt. Ltd.', (first respondent before AT) and this entity shall hereinafter be referred to as 'Rasi Travels' for the sake of convenience and clarity.
4. To be noted, Ind Travels and Rasi Travels are travel agents and as mentioned supra, the respondent SFP is a software provider.
5. Considering the nature of the matter, it is necessary to give a broad outline of common facts in instant two O.Ps.
6. Common Facts :
(a) Ind Travels and Rasi Travels are travel agents. SFP had a software which goes by the name 'Galileo System' and it is a software for 'Computerised Reservation Systems' ('CRS' for brevity). This court is informed that such software is also referred to as 'GDS Systems' wherein GDS stands for 'Global Distribution System'. This software shall hereinafter be referred to as 'Galileo GDS' for the sake of convenience and clarity.
(b) Each of the travel agents, namely Ind travels and Rasi travels entered into separate agreements, both dated 21.09.2017 with SFP and these agreements constitute the fulcrum of instant O.Ps. and are also the epicentre of instant lis.
(c) Agreement of SFP with Ind travels dated 21.9.2017 shall be referred to as 'said agreement-I' and agreement of SFP with Rasi travels dated 21.9.2017 shall be referred to as 'said agreement-II'.
(d) Under these agreements, i.e., said agreements I and II, the business module is such that SFP will provide Galileo GDS software to travel agents and while so providing Galileo GDS software, SFP besides providing the software, also gives specified sums of money to each of the two travel agents. To be noted, a sum of Rs.15 lakhs was given to Ind travels (Rs.1 lakh as signup fee and Rs.14 lakhs thereafter). Rasi traels was given Rs.30 lakhs by SFP (Rs.2 lakhs as signup fee and Rs.28 lakhs thereafter). It was agreed that these specified sums of money paid by SFP to travel agents shall be adjusted against incentive amounts payable by SFP to travel agents. In other words, this court is informed that vide said agreements I and II, travel agents undertook to use Galileo GDS and provide certain minimum quantum of business in different segments. In other words, th
